New Yorkers buying a home in Florida will be pleasantly surprised to find that closing costs down here are substantially lower than the closing costs they’re used to up north.
With the exception of broker commissions, paid by the seller, which remain stuck at 6% of the sale price across the nation, closing costs for both buyers and sellers are substantially lower comparatively in Florida.
A buyer utilizing a mortgage with 80% LTV can expect to pay ~1.4% on average in closing costs for a $1 million home, and ~1% on average for a $2 million home. For all cash purchases, the math is even sweeter. An all cash buyer can expect to pay ~0.7% in closing costs for a $1 million home, and ~0.5% for a $2 million home. For a luxury home buyer in the $10 million range, they can expect to pay ~0.7% if financing, and ~0.3% if buying all cash.
Table of Contents:
Buyers with a mortgage:
Title insurance
Florida Documentary Stamp Tax
Florida Nonrecurring Intangible Tax
Settlement or closing fee
Miscellaneous lender fees
Home inspection fee
County recording fees
Home insurance premium
Title and lien search fees
HoA or building fees
Survey fee
Florida Form 9 endorsement
Title insurance
Title insurance in Florida is based on a promulgated rate calculation, set by the State of Florida as follows per thousand:
From $0 to $100,000 of liability written $5.75
From $100,000 to $1 million, add $5.00
Over $1 million and up to $5 million, add $2.50
Over $5 million and up to $10 million, add $2.25
Over $10 million, add $2.00
As you can see, an owner’s title insurance policy will cost $5,075 for a million dollar Florida home, broken down by $575 for the first $100,000 and $4,500 for the remaining $900,000.
Fortunately, if you are getting a mortgage, the cost to issue a simultaneous policy to also cover your lender is only $25 additional.
This means for any mortgage amount below $1,000,000, you’d only pay $5,100 for both an owner’s title insurance policy as well as a lender’s title insurance policy.
Pro Tip: Whether the buyer or the seller pays for title insurance is negotiable and customs vary by county in Florida. While in most of Florida the seller typically pays for title insurance, in counties like Miami-Dade, Broward, Sarasota and Collier it is the buyer who traditionally pays.
Florida Documentary Stamp Tax
The Florida Documentary Stamp Tax affects both deed transfers as well as mortgages and other written obligations to pay money. Buyers will customarily pay the tax on the loan amount if they are purchasing with a mortgage, whereas sellers will customarily pay the tax, at a different rate and on the contract price, for the deed transfer.
Per Section 201.031, F.S. and the Florida Department of Revenue:
Mortgages, liens, security agreements, and other evidences of indebtedness are subject to tax and payable when filed and recorded in Florida. The tax is based on the full amount of the indebtedness secured by the mortgage or lien regardless of whether the indebtedness is contingent or absolute. The rate of tax is 35 cents per $100 or portion thereof of the amount secured thereby. There is no cap on the amount of tax due. All parties to the document are liable for the tax regardless of who agrees to pay the tax. If one party is exempt, the tax must be paid by a non-exempt party.
As you can see, someone buying a condo in Miami for $1,000,000 with a $800,000 mortgage will pay 0.35% x $800,000, or $2,800 in Florida’s version of the NYC mortgage recording tax.
Florida Nonrecurring Intangible Tax
Florida imposes an additional, one-time tax on indebtedness of Florida real property called Nonrecurring Intangible Tax. Per the Florida Department of Revenue:
The nonrecurring intangible tax rate is 2 mills. The tax is calculated by multiplying the amount of the obligation secured by Florida real property by 0.002.
Going back to our example of the $1 million condo buyer utilizing a $800,000 mortgage, he or she would owe a Nonrecurring Intangible Tax of 0.2% x $800,000 or $1,600.
Settlement or closing fee
The settlement or closing fee is paid to the title company for their services on closing day and usually ranges anywhere from $300 to $600 in lower cost counties to $600-$900 in higher cost counties.
Remember that the title company is often also the escrow agent. The Florida closing attorney that typically owns the title company is also often an owner of or an agent of the title insurance company.
Pro Tip: Remember that buyers and sellers are not required to hire their own real estate attorneys in Florida, unlike in New York where they’d have to shell out $2,000 to $4,000 on average for the privilege.
Miscellaneous lender fees
Mortgage lenders and banks will typically charge borrowers a slew of processing, appraisal and other miscellaneous fees which we’ll discuss below.
Bank processing fee: $1,000 to $1,500 on average. Often referred to as a “bank fee” or “application fee” and used to cover the bank’s administrative costs of processing your mortgage application.
Appraisal fee: $400 to $500 on average and typically paid by the buyer by credit card before closing. Though not technically a closing cost that’s paid on closing day, an appraisal is required by lenders to assess the value of the collateral.
Credit report fee: Typically $20 to $30. Lenders will often bill the borrower for running a hard credit check on their file.
Pro Tip: Lenders may offer you a discounted mortgage interest rate in return for you paying “points” upfront, i.e. paying a cash fee upfront. Paying points upfront for a lower interest rate for the term of the loan is entirely optional, and will make more sense if you intend to not pay off the mortgage sooner than anticipated.
Home inspection fee
A home inspection will cost typically $200 to $600, depending on where you are in Florida. For example, a recent home inspection in Miami Beach costed $393.75. A home inspection is critical if you’re buying a free-standing property like a single-family house, but is still customary to do in Florida even for condos where you’re only responsible for the interior of the apartment.
A home inspection is typically ordered by and paid for by the buyer during the inspection period after a contract has been fully signed. So technically, the home inspection is not a cost paid on closing day per se, but it nonetheless is a pretty common cost that buyers will have to pay in order to buy a home in Florida.
County recording fees
Official documents such as deeds and mortgages need to be original or court certified as well as signed and notarized to be accepted as an official, public record.
The fees you’ll pay will vary by county, but you can generally expect to pay under $50 all in. Here are a few examples of recording fees charged by Miami-Dade and Palm Beach counties.
Home insurance premium
Home insurance will typically cost around $600 for most people in Florida, though rates can vary widely based on what you decide to cover and which carrier you choose.
For example, someone might instead choose an insurance policy that costs $4,000 a year from a premium carrier that will be very generous and easy-going in its coverage and claims reimbursement policies.
Home insurance will generally be required by lenders if you are financing, but it isn’t required if you are purchasing all cash.
With that said, having a home insurance policy should be something that every buyer considers.
Pro Tip: For condo buyers, they’ll encounter the term H06 which refers to interior, wall-to-wall home insurance since their building typically has its own insurance policies. This “hazard” insurance policy is required by lenders even if you’re buying a condo. However, all cash condo buyers are not required to buy home insurance and will sometimes opt out.
Title and lien search fees
Who pays the title and municipal lien search fees in Florida varies by county. For example, in Miami-Dade and Broward counties the norm is for the seller to pay the fees for the closing agent to conduct the title search as well as the tax and the municipal lien searches.
Per the “As Is” Residential Contract for Sale and Purchase approved by The Florida Realtors and The Florida BAR:
Miami-Dade/Broward Regional Provision: Seller shall furnish a copy of a prior owner’s policy of title insurance or other evidence of title and pay fees for: (A) a continuation or update of such title evidence, which is acceptable to Buyer’s title insurance underwriter for reissue of coverage; (B) tax search; and (C) municipal lien search. Buyer shall obtain and pay for post-Closing continuation and premium for Buyer’s owner’s policy, and if applicable, Buyer’s lender’s policy. Seller shall not be obligated to pay more than $__ (if left blank, then $200) for abstract continuation or title search ordered or performed by Closing Agent.
However, in other Florida counties it can be more negotiable or more customary for the buyer to pay these charges. If you do end up being responsible for these charges, you can expect to pay around $100 to $200 for the title search and $100 to $200 for the municipal lien search. The cost will vary by county.
HoA or building fees
If you’re buying a condo, it’s likely that the managing agent of your building or the homeowner’s association (HoA) will charge one or more fees to set you up, even if the building doesn’t have a formal application process.
For example, the Carillon Miami Wellness Resort, a luxury wellness focused condominium complex in quiet North Beach, does not have a purchase application even though it does make prospective tenants fill out an application. However, Atlantic Pacific Management, the building’s management company, will still charge buyers a $100 account setup fee.
Survey fee
A survey will typically cost anywhere from $200 to $500, depending on lot size, property type and location. Surveys are critically important when buying a house but optional when buying a condo. That’s because the condo declaration will already include a survey of the property and unit from the time of construction and a review is typically sufficient.
If you’re buying free-standing property such as a single or multi-family house however, a survey is critically important to ensure there are no encroachments associated with fences or easements, which would be treated as a defect in the title by most real estate contracts. Not only should you know whether your fence encroaches on your neighbor’s property, or vice versa, but a survey will also determine whether any improvements on the property encroach on public utility or drainage easements.
Pro Tip: There are two types of surveys which meet Florida statutes, a regular survey and a ALTA (American Land Title Association) survey. Even though both will show correct boundary lines and all structures on the property, an ALTA survey costs more but is much more detailed. An ALTA survey for example will also look into zoning requirements, building setback requirements and so on.
Florida Form 9 endorsement
The Florida Form 9, also known as the Alta 9 Endorsement, is by far the most popular title insurance endorsement (protections against specific conditions that are not covered by standard title insurance).
Because title insurance policies typically don’t insure against defects found via the survey, many lenders will also require borrowers to get a Florida Form 9 title insurance policy endorsement to safeguard against loss or damage from violations of deed restrictions, encroachments, and building setback requirements.
You can expect to pay 10% of the cost of the title insurance premium for this additional layer of protection, which is often mandated by your lender if you are financing with a mortgage.
So the cash buyer of a $1 million Miami condo who’s paying $5,075 in title insurance would be charged an additional $507.50 for an ALTA 9.2 endorsement.
Pro Tip: The ALTA 9 endorsement is typically issued for houses and commercial buildings. It is not generally utilized for condominium buildings and condo buyers do not get surveys because their unit cannot encroach onto another property.
This is what I saw recently for a house closing in Florida for a ~$968k condo. Very interesting to hear that customs do vary by county on who pays title insurance, and title search / lien search costs in Florida.
$1,150 bank processing fee (via Chase)
$490 appraisal fee
$22 credit report fee
$12 flood search
$600 settlement closing fee
$2,058 mortgage tax
$4,000 a yr hazard insurance policy
$1,176 intangible tax
Plus around a thousand in various title fees consisting of:
– $137 county recording fee
– $295 survey fee
– $350 lender’s title insurance
– $150 document prep fee
– $494 ALTA 9A endorsement
Hi Johnny, thank you for sharing! Chase does seem to be on the lower side for bank processing fees, so congrats on that. It sounds like this GFE is for someone who purchased a house (hence the high hazard insurance cost) outside of the Miami Ft. Lauderdale area.
How can we tell? Because the buyer is only paying for the lender’s title insurance policy, and the seller is presumably paying for the buyer’s title insurance policy, plus title/tax/municipal lien search fees. This is the norm in certain counties outside of the Miami Ft. Lauderdale area.
Purchase price : $521.000
Loan amount : $470,000
Closing cost: $37, 000
Isn’t this closing cost excessive for a house in Florida?